Best Accounting Software for Small Business in 2025

These days, the most valuable assets of small businesses are accounting tools. Small business accounting software helps small business owners automate all processes related to accounting, allowing them to reduce costs while improving productivity. But not all accounting software for small business are created equal, making the selection process a tedious one. This is also because a lot of considerations should be made before committing to an app. If you’re in the market for such a solution, you can check out our list of top 20 accounting tools for small business. But before you embark on your search, you’ll need to learn about some basic information about the best accounting software solutions for small business:

The business accounting software for small business reviews in our platform highlight the diverse applications of this type of solution. We also put the spotlight on the prominent features that are specifically designed for different industries. Such is the reason why selecting the best accounting software for small business can either boost your business or leave your finances in shambles. To avoid this gloom and doom scenario, it’s not enough to know—what is accounting software?—and the core features that come with one.

Listing down your basic requirements in such a solution and considering a number of products is advised. It is also recommended that you take free accounting software tools for small business for a spin, take advantage of free trials or demos for comparison purposes. You may start with some of the top accounting software for small business that are currently in the market: FreshBooks, NetSuite ERP, QuickBooks Online, Sage Business Cloud Accounting, and Tipalti Approve.

Small business – The accounting needs of small businesses are pretty basic—accounts payable/accounts receivable, general ledger, bank reconciliation, and fixed assets. Normally, a small business requires but core accounting features or put simply, a basic plan with a couple of add-on features at most. Although vendor support is considered critical, small businesses rarely require such, except during the setup process. To learn more about this type of platform, you can read our list of the best small business accounting software.

Routine small business – your accounting needs are straightforward. These include: general ledger, accounts payable/accounts receivable, fixed assets, and bank reconciliation. In most cases, you only need the basic plan or core accounting with one or two add-ons to your liking. Vendor support is needed, but very rarely, perhaps only during setup. For a more detailed look on this type of solutions check out our list of accounting software for small business.

Specific sectors – There are industries, such as the construction and engineering sectors that need accounting software features that allow them to handle project estimation and costing. Also, organizations like software development firms require software features to meet certain production stages. For nonprofits and fundraising organizations, accounting solutions that come with specific reporting capabilities are ideal. To pick out an accounting solution that matches your organization’s needs, look for platforms that are specifically targeted at your industry.

FreshBooks: A cloud-based accounting solution for small businesses that is designed to streamline client invoicing. Its core functionalities include recurring subscriptions and online payment collection via payment gateways like PayPal.

QuickBooks Online: This accounting software is meant for both small businesses and freelancers. It brings a full feature set and allows for up to five users while providing limited features to an unlimited number of users.

Sage Business Cloud Accounting: Sage Business Cloud Accounting is a cloud-based accounting and invoicing management software that specifically caters to small businesses. It’s core features include expense and compliance management and accounting.

Xero: A web-based accounting platform designed for individual users and small businesses. It offers a collaboration feature for group financial activities.

Zoho Books: An easy-to-use accounting application that caters to small businesses. It helps users stay on top of their finances while keeping their cash flow in order.

A2X: This cloud-based application is primarily an ecommerce solution that directs transaction information from online sales channels, such as Shopify and Amazon to accounting systems. This core functionality allows for accurate bookkeeping and eliminates the need for spreadsheets when preparing financial statements and recording sales transactions manually.

Accounting software for small business can boost your company in a variety of ways. It’s all a matter of considering what you need as a business. It is therefore, advised that you classify your industry first before you sign that dotted line. Such can be achieved by taking a step back and looking at the whole picture.

Enterprise Resource Management Software (ERP). ERP solutions are basically umbrella platforms that are capable of handling different business processes, including point-of-sale, reports and finances, purchasing, inventory management, and even billing. Many apps of this kind are also designed to serve particular industries, such as in the case of manufacturing and construction.

Payroll Software. Often a part of accounting suites, payroll software are designed to handle payroll runs, apart from having robust accounting and reporting functionalities. Cash-flow calculators are also staples of payroll solutions. Many such products are likewise industry-specific.

Freemium Software. What sets freemium accounting solutions apart from their cousins is that they have watered-down features and do not require users to sign-up for paid subscriptions to access them. Most of the time, these platforms are installed on-premise, requiring users to furnish vendors with corporate or financial information to be able to download them.

Billing & Invoicing – this feature can come in the form of either a module or a stand-alone component of an accounting software for small business. This functionality allows users to automate routine collection tasks. Depending on the payment method used, size of operations, and industry best practices, billing and invoicing can vary by industry.

Core Accounting – this is also a staple of virtually any accounting software for small business. This is why one should see to it that this feature is present in your app of choice. Core accounting features usually come in the form of a module, which include functionalities such as accounts receivable, bank reconciliation, general ledger, accounts payable, and fixed assets. Basic accounting functionalities are often housed in applications’ basic plans, but some developers offer them as freemium programs as a way to convince users to upgrade to paid plans.

Budgeting & Forecasting – this feature often comes as an add-on. It lets users make annual budget estimates using sales targets and historical data as basis. When offered as a stand-alone module, the budget and forecasting feature can pool in budgets and forecasts for different departments, which can be used to come up with a complete company estimate. On the other hand, a bundled budget and forecasting feature only carries a lone forecast and budgeting tool.

Fixed Asset – this functionality helps users manage financial data on corporate assets, regardless if it is bundled or an add-on feature. Core features include audit history, depreciation calculation and cost management. The fixed assets feature is particularly important to organizations that have numerous assets. However, for those who have few assets, the bundled variety is just as good.

Payroll System – this allows users to run payrolls, automatically withhold and pay taxes, print checks and generate tax and legal reports. It may also be a stand-alone system or an add-on. A critical feature to look for would be a capability to automatically remind users of government payments, helping them avoid penalties.

Project Accounting – commonly marketed as a stand-alone product, this feature is most useful to companies that work on multiple projects such as software developers and construction firms. It houses core accounting features while being able to estimate costs, labor, equipment, and materials. These may come as basic solutions that can manage but single projects at a time or complex systems that can handle multiple projects.

Fund Accounting – this feature is very beneficial to organizations that have unique financial reporting needs. Capabilities include grant management, donation expenditure tracking and Government Accounting Standards Board compliance.

Inventory Management – this is usually a module that is specifically designed to help manage inventory. It lets users manage product movement, helping them maintain appropriate stock levels. Some advanced solutions are able to compute stock depreciation for companies that have product lines that have a short shelf-life. It can likewise track sales, orders, and deliveries.

The need to cut costs drives the automation of finance and accounting processes, which likewise boosts productivity. Automation also gives businesses a complete picture of financial trends. Such are some of the advantages and benefits of accounting software for small business.

• Better Strategies. Accounting apps do not only ensure that monthly bills are spic and span. Their provision of an accurate picture of your business’ financial status will also help in the creation of better strategies. Such software allow users to make accurate forecasts and follow trends.
• Resource Transparency. With accounting software, small businesses can easily manage their finances. Users that lack the proper accounting skills can easily learn how to use such systems as they often come with easy-to-use interfaces and easy-to-understand user guides. This equates to the absence of the need to train staff on their usage. It will also result in employees being better informed on businesses’ financial status.
• Improved productivity. A robust A&F software provides organizations with the opportunity to automate otherwise routine tasks and processes that take a big chunk of their time. Accounting solutions basically collect, organize and analyze financial data, allowing users to focus on more important matters.
• Savings. Adopting accounting software doesn’t necessarily mean that you have to reconfigure your existing business system. Most of these products can easily be integrated with any software environment. This eliminates the need to run multiple programs and transfer financial information manually.
• Report Generation. Accounting software for small business can automatically generate reports based on accurate financial data. It can likewise generate credit notes and invoices, which results in the elimination of human error.

The future is uncertain, but this is not to say that managing your business’ finances should be put on the back burner. Accounting software for small business may not be seen to experience a phenomenal growth, but current trends point to a positive future.

• The use of cloud-based technologies. Local storage is seen to take a backseat as could be seen in the growth of the Software-as-a-Service market. The cloud is also seen as a secure place for critical business data.
• Mobile access. Along with the cloud development is the increase in the use of mobile technology, which allows users to access files wherever and whenever.
• OCR improvement. The constant improvement in Optical Character Recognition will allow users to turn printed documents into digital information. This to accountants being able to automatically enter financial data.

• Scalability – even small businesses should seriously evaluate an app for scalability. The potential for growth is always present, which could result in the need to expand and make changes to financial management. Keep in mind that your accounting software should at least support data export in case you need to upgrade your system.
• Cross-process integration – other business systems like project management, CRM and sales software perform better when integrated with your finances. The ideal accounting software for small business must be able to cut across business processes. A system’s capability to export information in formats like TXT, CSV, or PDF makes an accounting solution potentially compatible with other platforms.
• General vs. industry-specific accounting – Industry-specific accounting solutions beats general accounting platforms every time. However, you must take factors such as integration, scalability, and vendor support to ensure the superiority of your chosen industry-specific application.

Generally, accounting software for small business are deployed two ways—cloud-based and hybrid. Albeit each has its own strengths, it is important that you determine which product is appropriate for your business needs.

• Cloud-based. Cloud-based accounting software for small business is a revolutionary alternative to conventional systems in that it allows users to access their data anywhere at any given time, using any device. This setup eliminates the need for powerful and expensive hardware. Computing power is effectively provided by the vendor. Another benefit is that collaboration among team members is made easier with cloud-based systems. However, such solutions do have drawbacks. First, they are offered in subscription plans, which means you have to pay for them monthly or annually. Second is the need for an internet connection when accessing the platforms. Lastly, cloud-based solutions are not known for top-notch security.
• Hybrid. There are accounting software for small business that both support on-premise and web-based deployment. The good thing about hybrid systems is that you can work both online and offline. Collaboration is likewise supported in this kind of setup. The only downside to hybrid solutions is their cost.

Like any other aspect of a business, cost is a key consideration when shopping for accounting software for small business. Failing to do so could result in overspending, especially if one makes the mistake of purchasing an enterprise-grade solution. Different vendors offer different payment schemes and subscription plans. The following are some of the most popular ones.

• Free. There are indeed free accounting software for small business. See our FAQ section to learn more about these platforms.
• One-Time. Some vendors let users access their platforms by charging a one-time fee. Prices are usually based on the number of licenses. There are vendors that offer lifetime licenses that come with free updates. However, some that roll out new versions make support obsolete. Remember to consider these situations before signing that dotted line.
• Monthly Subscription. SaaS companies usually offer this type of payment scheme. This suits first time users as they can cancel their subscriptions any time. However, it’s comparatively more costly than annual subscription plans.
• Annual Subscription. This plan requires users to pay for a year’s worth of access to a cloud-based accounting solution. It’s much cheaper than its monthly payment plan. But you may get locked-in with the vendor for the whole year.

Before getting into a long-term payment plan, it is wise to sign-up for a free account first. But if a vendor does not offer a free plan, you may opt for a free trial. Take the software for a test drive then move on to a monthly payment plan. If you find the software catering to your needs, only then will you be ready to go for annual subscription plans, which are far less costly.